What is it?
A debit is an accounting term used to describe one side of a financial transaction, the result of which can have varying effects on the balance of the account depending on whether it is an asset, liability, revenue or expense. On a balance sheet, a debit generally indicates an increase to an asset or a decrease to a liability amount. On the operating statement, a debit will increase an expense item or decrease a revenue item. A complete transaction requires both a debit and a credit.
Why is it important?
It is important to understand the difference between a debit and a credit when recording financial transactions. An error, such as reversing the debit and credit, can have detrimental effects on your department’s budget and the overall financial statements for the University.
For example, imagine there is an expense in one of your accounts that does not belong to you and you send in a request to the Controller’s Office to have it corrected. If they accidentally debited your account instead of crediting it, the amount of expenses in your account would increase instead of decreasing, and you would have less money left over in your budget.